Dec. 21 (Bloomberg) — Solar developers in Spain are trying
to build Europe’s first large-scale plants to sell electricity
at market prices, taking advantage of a crash in equipment costs
and some of the continent’s highest levels of sunlight.
Builders have sought permits to connect 37.5 gigawatts of
utility-sized projects to Red Electrica Corp. SA’s transmission
grid, company spokeswoman Susana Moreno said. While demand
studies show that’s far more new generation than the country
needs, the first few plants could set a commercial precedent.
The companies include Gestamp Renewables Corp. and Solaria
Energia Medio Ambiente SA, which only five years ago could earn
about nine times more than fossil-fuel plants under one of the
world’s most generous subsidy programs. As photovoltaic-panel
prices tumbled, the aid was cut several times and altogether
killed in January amid criticism in Parliament for adding more
than 2.5 billion euros ($3.3 billion) a year to consumer bills.
“Spain is probably set to have Europe’s first utility-
scale solar parks without subsidies” according to Jenny Chase,
the Zurich-based head of solar energy analysis at Bloomberg New
Energy Finance.
Solar cell prices have plunged about 67 percent in the past
two years as Chinese manufacturers led by Suntech Power Holdings
Co. ramped up production quicker than demand. The top five
makers of traditional silicon-based solar cells expanded output
by 55 percent on average last year, according to data compiled
by New Energy Finance, an affiliate of Bloomberg News.
Solar Pioneers
Solar pioneers Spain and Germany have been winding down
subsidies in the form of feed-in tariffs, along with the French,
U.K., Italian, Czech Republic and Greek governments in the last
two years. Japan this year initiated feed-in tariffs, which pay
an above market rate to generators that feed power into grids.
Spanish project developers erected more plants than the
rest of the world put together in 2007-2008 when prices were at
their highest. They’ve been criticized by utilities that were
forced to buy every kilowatt-hour they produced, by consumer
groups for bloating bills for homes and businesses, and by
analysts for attracting a novices and speculators as promoters.
Chase said the majority of the newest proposals may not be
built.
“We believe most of these applications to be largely
speculative,” she said. “There’s perhaps 1 gigawatt of serious
projects under planning, which may get built in 2013-2014 on
balance sheet and with short-term power-purchase agreements, if
approved by the government.”
Total Capacity
Such purchase agreements typically bind a utility to buy
the power generated for a specified term of years. The country
currently has about 4.2 gigawatts of solar capacity, which
produced about 2.7 percent of the country’s electricity last
year. It has about 100 gigawatts of total capacity. With peak
demand of about 45 gigawatts, new plants could take business
from existing installations, such as those burning natural gas.
At least six developers have announced plans this year to
build 1 megawatt-plus solar plants, able to supply at least 500
homes when running at full power.
The applications are for plants with 150 megawatts to 500
megawatts in capacity. All would be larger than any in Europe,
where utility-scale solar parks have so far benefited from state
support through long-term tariffs or green certificates, or a
tradable voucher that utilities have to buy or earn.
Developers that have announced solar plans this year in
Spain include local companies Solaria and Gestamp Renewables, as
well as Germany’s Gehrlicher Solar AG, S.A.G. Solarstrom AG and
Wuerth Solar GmbH & Co.
Sunniest Regions
Red Electrica has received grid-connection applications for
more than 160 large-scale solar projects, mainly in Extremadura,
Andalucia and Murcia, the sunniest regions in the south. Solaria
and Solarstrom plan to start building as early as the second
half of next year, subject to securing financing and power-
purchase agreements.
The biggest hurdle they face is to get the government of
Prime Minister Mariano Rajoy to re-start the planning process
for new solar generation, said Eduardo Collado, director of
operations at lobby group Union Espanola Fotovoltaica. Rajoy
ordered the end of subsidies for new projects 10 months ago.
“None will go ahead until that changes, even though there
are a few plants definitely needed at points in the system where
the network operator wants them,” Collado said in an interview.
The group represents about 330 companies and firms.
Projects With Partners
Solaria plans to build a 150-megawatt solar park near
Toledo for less than 150 million euros and sell the electricity
for 55 euros to 60 euros a megawatt-hour, according to Carrasco.
Solarstrom seeks to develop a 165-megawatt project in
Extremadura along with local partners. The regional governments
of Extremadura and Murcia have announced their support for the
solar projects in their areas.
“We can be the first to develop a project without
subsidies,” David Carrasco, Solaria’s marketing and sales
director, said in an interview in June. “We will build it in
the second half of 2013 because we think the cost of
photovoltaic will have dropped enough by then and, given the
irradiation in Spain, will be totally competitive.”
Utility-scale solar projects in Spain will face
overcapacity in the electricity market, according to New Energy
Finance’s Chase.
“We fear the economics may not work long-term, even if
supported by current electricity pool prices, because large
amounts of solar in the Spanish grid would depress daytime power
prices,” she said.
To contact the reporter on this story:
Marc Roca in London at
mroca6@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
